Anti-dumping measures on energy efficient Chinese light bulbs dropped

5 September 2008

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German light bulb producer Osram has withdrawn its application for extending EU anti-dumping duties on Chinese energy-saving integrated electronic compact fluorescent lamps (CFL). The 11 August decision brings the long-standing, high profile trade dispute to an end for the foreseeable future.

Osram, the dominant CFL producer in Europe, requested permission to impose anti-dumping duties against Chinese exports in 2001. Measures were imposed the same year and were extended for another year last October. Because the deadline for submitting and extension application has already lapsed, the duties are now set to expire on 18 October.

It appears that Osram's decision is in part based on a lack of political support in the EU. "We have had to concede...that we have not been able to secure a majority in Europe for the Osram position," the company's CEO Martin Goetzeler said in a statement.

Political pressure from a wide range of stakeholders - including environmentalist groups, retailers, consumers and business competitors - over the duties had been growing since they were imposed in 2001.

This pressure intensified last October when the anti-dumping duties were given a one year extension. "This is narrowly protectionist and sends a regressive message to developing country producers that they will be excluded from markets for cleaner products created by the higher environmental standards expected by European consumers," said a WWF press release at the time.

In a July 2008 retailers roundtable, many business leaders - including Sir Terry Leahy of Tesco and Sören Hansen of Ikea - said the tariffs of up to 66 percent ensured that prices were "artificially inflated" when consumers reached the shops and this depressed demand for energy-saving bulbs.

The case has also attracted widespread attention because of the divide of Europe's light bulb makers between those who have production plants in China and those focusing on local production in Europe. While Osram does have factories in China, production remains focussed in Europe. Philips Lighting and other EU producers with their main production facilities in Asia complain that the duties have been squeezing their profit margins. These companies have been fighting their own case at the EU Court of First Instance to have the anti-dumping duties scrapped completely.

Although the CFL anti-dumping case is coming to a close, analysts think it might serve as a proxy for revisiting some rules in EU anti-dumping measures. "This anti-dumping case has put forward the ongoing discussions on the decision making criteria and process to practice the definition of 'EC community interests'," says Xiaoyi Tang, a Brussels-based trade lawyer. Tang says the EU needs to not only strike a balance between producers, retailers and consumers, but also between trade policy instruments and broader community policy objectives such as climate security, social and environmental standards.

Some point out that obstacles to revise trade defence mechanisms are difficult to overcome. Min Shu, an economist at Fudan University, says the energy saving light bulb issue is just a small window for the complex political economy behind the EU anti-dumping measures. Shu says there are clashes between producers from EU member states (i.e., Netherlands-based Philips and Germany-based Osram in the light bulb case. He also says that the divide between the trade Commissioner and industry Commissioner can complicate matters, and points to the shelving of EU trade commissioner Peter Mandelson's proposal to reform trade defence rules as an example.

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